text: DSpace Community: http://hdl.handle.net/2381/2777 2015-10-13T21:22:32Z 2015-10-13T21:22:32Z The Effectiveness of the ECB's Asset Purchase Programs of 2009 to 2012 Hall, Stephen Tavlas, George S. Gibson H, Stephen G. http://hdl.handle.net/2381/33239 2015-10-13T09:02:38Z 2015-10-13T09:02:24Z Title: The Effectiveness of the ECB's Asset Purchase Programs of 2009 to 2012 Authors: Hall, Stephen; Tavlas, George S.; Gibson H, Stephen G. Abstract: We examine the impact of the ECB's Securities Market Program (SMP) and its two Covered Bond Purchase Programs (CBPPs ) on sovereign bond spreads and covered - bond prices, respectively, for five euro - area stressed countries -- Greece, Ireland, Italy, Portugal, and Spain. Our data are monthly and cover the period from 2004M01 through 2014M07. In contrast to previous studies, we use actual, confidential, intervention data. Our results indicate that the respective asset purchase programs reduced sovereign spreads and raised covered bond prices . The quantitative effects of the programs were modest in magnitude, but nevertheless significant . We also provide a simple theoretical model that explains why official asset purchases can reduce a country's default - risk spreads. Description: The file associated with this record is under a 36-month embargo in accordance with the publisher's self-archiving policy, available at http://www.elsevier.com/about/company-information/policies/sharing. The full text may be available in the links provided above. 2015-10-13T09:02:24Z Existence, Uniqueness, and Comparative Statics in Contests Jensen, Martin Kaae http://hdl.handle.net/2381/33229 2015-10-13T02:00:45Z 2015-10-12T09:13:55Z Title: Existence, Uniqueness, and Comparative Statics in Contests Authors: Jensen, Martin Kaae Abstract: Many important games are aggregative allowing for robust comparative statics analysis even when a game does not exhibit strategic complements or substitutes (Acemoglu and Jensen (2013)). This paper establishes such comparative statics results for contests improving upon existing results by (i) allowing payoff functions to be discontinuous at the origin, and (ii) allowing for asymmetric rent-seeking contests and patent races. A leading example where (i) is relevant is the classical Tullock contest (Tullock (1980)). The paper also studies existence and uniqueness of equilibria extending the results of Szidarovszky and Okuguchi (1997) and Cornes and Hartley (2005) to patent races Description: The file associated with this record is under permanent embargo from acceptance in accordance with the publisher's copyright agreement. 2015-10-12T09:13:55Z Goals, Motivation and Gender Smithers, Samuel http://hdl.handle.net/2381/33223 2015-10-10T02:02:58Z 2015-10-09T11:40:15Z Title: Goals, Motivation and Gender Authors: Smithers, Samuel Abstract: I present an experiment on non-binding goals and motivational effects. Consistent with results from psychology, I find that goals increase output. This is due to improved speed and accuracy. Men are more responsive to goals than women. 2015-10-09T11:40:15Z Pollution Abatement as a Source of Stabilisation and Long-Run Growth Varvarigos, Dimitrios Palivos, T. http://hdl.handle.net/2381/33139 2015-10-02T02:00:51Z 2015-10-01T09:14:46Z Title: Pollution Abatement as a Source of Stabilisation and Long-Run Growth Authors: Varvarigos, Dimitrios; Palivos, T. Abstract: In a two-period overlapping generations model with production, we consider the damaging impact of environmental degradation on health and, consequently, life expectancy. Despite the presence of social constant returns with respect to capital, which would otherwise generate unbounded growth, when pollution is left unabated, the economy cannot achieve such a path. Instead, it converges either to a stationary level of capital per worker or to a cycle in which capital per worker oscillates permanently. The government's involvement in environmental preservation proves crucial for both short-term dynamics and long-term prospects of the economy. Particularly, an active policy of pollution abatement emerges as an important engine of long-run economic growth. Furthermore, by eliminating the occurrence of limit cycles, pollution abatement is also a powerful source of stabilisation. 2015-10-01T09:14:46Z Robust Comparative Statics in Large Dynamic Economies Acemoglu, D. Jensen, Martin Kaae http://hdl.handle.net/2381/33135 2015-10-01T02:00:38Z 2015-09-30T15:38:00Z Title: Robust Comparative Statics in Large Dynamic Economies Authors: Acemoglu, D.; Jensen, Martin Kaae Abstract: We consider infinite-horizon economies populated by a continuum of agents subject to idiosyncratic shocks. This framework contains models of saving and capital accumulation with incomplete markets in the spirit of works by Bewley, Aiyagari, and Huggett; models of entry, exit, and industry dynamics in the spirit of Hopenhayn's work; and dynamic models of occupational choice and search models as special cases. Robust and easy-to-apply comparative statics results are established with respect to exogenous parameters as well as various kinds of changes in the Markov processes governing the law of motion of the idiosyncratic shocks. Description: The file associated with this record is under a 12-month embargo from publication in accordance with the publisher's self-archiving policy, available at http://www.press.uchicago.edu/journals/jrnl_rights.html#faq4. The full text may be available in the publisher links provided above. 2015-09-30T15:38:00Z Automatic grade promotion and student performance: Evidence from Brazil Foureaux Koppensteiner, Martin http://hdl.handle.net/2381/33125 2015-09-30T02:00:47Z 2015-09-29T12:20:11Z Title: Automatic grade promotion and student performance: Evidence from Brazil Authors: Foureaux Koppensteiner, Martin Abstract: This paper examines the effect of automatic grade promotion on academic achievement in 1993 public primary schools in Brazil. A difference-in-differences approach that exploits variation over time and across schools in the grade promotion regime allows the identification of the treatment effect of automatic promotion. I find a negative and significant effect of about 7% of a standard deviation on math test scores. I provide evidence in support of the interpretation of the estimates as a disincentive effect of automatic promotion. The findings contribute to the understanding of retention policies by focussing on the ex-ante effect of repetition and are important for more complete cost-benefit considerations of grade retention. © 2013 Elsevier B.V. Description: The file associated with this record is under a 36-month embargo from publication in accordance with the publisher's self-archiving policy, available at http://www.elsevier.com/about/company-information/policies/sharing. The full text may be available in the links provided above. 2015-09-29T12:20:11Z Fragmentaion and Stability of Market Ladley, Daniel Lensberg, Terje Palczewski, Jan Schnke-Hoppé, Klaus Reiner http://hdl.handle.net/2381/33052 2015-09-17T02:00:46Z 2015-09-16T11:13:12Z Title: Fragmentaion and Stability of Market Authors: Ladley, Daniel; Lensberg, Terje; Palczewski, Jan; Schnke-Hoppé, Klaus Reiner Abstract: Trading skills are highly rewarded in practice but largely ignored in theoretical models of financial markets. This paper demonstrates the importance of skills by examining their interaction with market fragmentation and market stability. We consider a computational model where traders' abilities to accurately price assets are endogenous. In contrast to models that do not consider skills, we find that centralising markets can lead to higher price volatility and less resilience to shocks because it increases the equilibrium proportion of unskilled traders. Description: 18 mth embargo from publication. 2015-09-16T11:13:12Z Are all sovereigns equal? A test of the common determination of sovereign spreads in the euro area Gibson, H. D. Hall, Stephen G. Tavlas, G. S. http://hdl.handle.net/2381/33051 2015-09-16T02:00:51Z 2015-09-15T10:54:35Z Title: Are all sovereigns equal? A test of the common determination of sovereign spreads in the euro area Authors: Gibson, H. D.; Hall, Stephen G.; Tavlas, G. S. Abstract: With the outbreak of the Greek financial crisis in late 2009, spreads on Greek (and other) sovereigns reached unprecedented levels. Using a panel data of euro-area countries, we test whether the markets treated all euro-area countries in an equal manner over the period 1998:m1 to 2012:m6. An F test of the pooling assumptions suggests that Greece, Ireland, and Portugal were not part of the overall pool. In a separate test on the individual coefficients we find that the coefficients on these three countries moved in a similar direction away from the pool, suggesting that markets treated these three countries more acutely than the rest of the pool. 2015-09-15T10:54:35Z Inflation and Business Cycle Convergence in the Euro Area: Empirical Analysis Using an Unobserved Component Model Hall, Stephen G. Lagoa, S. http://hdl.handle.net/2381/32957 2015-08-22T02:01:43Z 2015-08-21T08:50:48Z Title: Inflation and Business Cycle Convergence in the Euro Area: Empirical Analysis Using an Unobserved Component Model Authors: Hall, Stephen G.; Lagoa, S. Abstract: The literature on optimum currency areas states that large inflation differentials can undermine monetary union. In the euro area, inflation rates diverged after the creation of the single currency, but started to converge again from mid-2002. Against this background, we assess the convergence of inflation rates and business cycles and study the relationship between them. The analysis is made using an unobserved component model estimated with the Kalman filter. In general, from 1980 to 2008 inflation rates and business cycles became more aligned in the euro area, but inflation rates converged more quickly than business cycles. The output gap is found to be a better indicator of the business cycle than unit labour cost when studying convergence. By looking at the causality between the convergence of inflation and output gap, it is found that inflation divergence has a limited destabilising economic impact. 2015-08-21T08:50:48Z Trust based social capital, economic growth and property rights: Explaining the relationship Ahmad, Mahyudin Hall, Stephen G. http://hdl.handle.net/2381/32500 2015-07-04T02:01:33Z 2015-07-03T10:58:49Z Title: Trust based social capital, economic growth and property rights: Explaining the relationship Authors: Ahmad, Mahyudin; Hall, Stephen G. Abstract: Previous studies on social capital are able to show its significant growth-effect, however the majority of studies are in cross-sectional setting, and the widely used measure of social capital is generalized trust variable. Using panel estimation technique which hitherto has been limited in social capital studies, we show that generalized trust data obtained by the World Value Survey (WVS) are unable to yield sufficiently robust results in panel estimation due to missing observations problem. Subsequently, we propose a number of trust-alternative variables to proxy for social capital and re-estimate its effect on growth and property rights. The results improve significantly and we are able to show that social capital is a deep determinant of growth and it is affecting growth via property rights channel. The findings also give supporting evidence to the primacy of informal rules and constraints as proposed by North (2005) over the political prominence theory by Acemoglu, Johnson, & Robinson (2005). The results partially confirm the findings by Williamson & Kerekes (2011) on the underlying determinants of property rights and provide empirical support to the Clague, Keefer, Knack, & Olson (1999)'s argument of positive relationship between contract intensive money and property rights. Description: JEL code: O43 2015-07-03T10:58:49Z Wavelet theory and its applications in economics and finance Lai, Wenlong http://hdl.handle.net/2381/32315 2015-05-30T02:03:43Z 2015-05-29T08:47:07Z Title: Wavelet theory and its applications in economics and finance Authors: Lai, Wenlong Abstract: Wavelets orthogonally decompose data into different frequency components, and the temporal and frequency information of the data could be studied simultaneously. This analysis belongs within local nature analysis. Wavelets are therefore useful for managing time-varying characteristics found in most real-world time series and are an ideal tool for studying non-stationary or transient time series while avoiding the assumption of stationarity. Given the promising properties of wavelets, this thesis thoroughly discusses wavelet theory and adds three new applications of wavelets in economic and financial fields, providing new insights into three interesting phenomena. The second chapter introduces wavelet theory in detail and presents a thorough survey of the economic and financial applications of wavelets. In the third chapter, wavelets are applied in time series to extract business cycles or trend. They are useful for capturing the changing volatility of business cycles. The extracted business cycles and trend are linearly independent. We provide detailed comparisons with four alternative filters, including two of each detrending filters and bandpass filters. The result shows that wavelets are a good alternative filter for extracting business cycles or trend based on multiresolution wavelet analysis. The fourth chapter distinguishes contagion and interdependence. To achieve this purpose, we define contagion as a significant increase in short-run market commovement after a shock to one market. Following the application of wavelets to 27 global representative markets' daily stock-return data series from 1996.1 to 1997.12, a multivariate GARCH model and a Granger-causality methodology are used on the results of wavelets to generate short-run pair-wise contemporaneous correlations and lead-lag relationships, respectively, both of which are involved in short-run relationships. The empirical evidence reveals no significant increase in interdependence during the financial crisis; contagion is just an illusion of interdependence. In addition, the evidence explains the phenomenon in which major negative events in global markets began to occur one month after the outbreak of the crisis. The view that contagion is regional is not supported. The fifth chapter studies how macroeconomic news announcements affect the U.S. stock market and how market participants' responses to announcements vary over the business cycle. The arrival of scheduled macroeconomic announcements in the U.S. stock market leads to a two-stage adjustment process for prices and trading transactions. In a short first stage, the release of a news announcement induces a sharp and nearly instantaneous price change along with a rise in trading transactions. In a prolonged second stage, it causes significant and persistent increases in price volatility and trading transactions within about an hour. After allowing for different stages of the business cycle, we demonstrate that the release of a news announcement induces larger immediate price changes per interval in the expansion period, but more immediate price changes per interval in the contraction period, from the old equilibrium to the approximate new equilibrium. It costs smaller subsequent adjustments of stock prices along with a lower number of trading transactions across a shorter time in the contraction period, when the information contained in the news announcement is incorporated fully in stock prices. We use a static analysis to investigate the immediate effects of news announcements, as measured by the surprise in the news, on prices, and adopt a wavelet analysis to examine their eventual effects on prices. The evidence shows that only 6 out of 17 announcements have a significant immediate impact, but all announcements have an eventual impact over different time periods. The combination of the results of both analyses gives us the time-profile of each news announcement's impact on stock prices, and shows that the impact is significant within about an hour, but is exhausted after a day. 2015-05-29T08:47:07Z A characterization of the symmetrically balanced VCG rule in the queueing problem Chun, Y. Mitra, M. Mutuswami, Suresh http://hdl.handle.net/2381/32302 2015-05-26T08:50:20Z 2015-05-26T08:49:53Z Title: A characterization of the symmetrically balanced VCG rule in the queueing problem Authors: Chun, Y.; Mitra, M.; Mutuswami, Suresh Abstract: We characterize the symmetrically balanced VCG rule in the queueing problem using the axioms of outcome efficiency, budget balance, equal treatment of equals, Pareto indifference, together with a weakening of strategy-proofness, upward-invariance. Description: JEL classification C72; D63; D82 2015-05-26T08:49:53Z Trust, Trustworthiness and the Consensus Effect: An Evolutionary Approach Adriani, Fabrizio Sonderegger, S. http://hdl.handle.net/2381/32129 2015-06-02T08:46:21Z 2015-05-07T09:29:32Z Title: Trust, Trustworthiness and the Consensus Effect: An Evolutionary Approach Authors: Adriani, Fabrizio; Sonderegger, S. Abstract: People often form expectations about others using the lens of their own attitudes (the so-called consensus effect). We study the implications of this for trust and trustworthiness in an evolutionary model where social preferences are endogenous. Trustworthy individuals are more "optimistic" than opportunists and are accordingly less afraid to engage in market-based exchanges, where they may be vulnerable to cheating. Depending on the distribution of social preferences in the population, the material benefits from greater participation may compensate for the costs of being trustworthy. By providing an explicit account of how individuals form and revise their beliefs, we are able to show the existence of a polymorphic equilibrium where both trustworthiness and opportunism coexist in the population. We also analyze the effect of enforcement, distinguishing between its role as deterrence of future misbehavior and as retribution for past misbehavior. We show that enforcement aimed at deterring opportunistic behavior has ambiguous effects on social preferences. It may favor the spreading of trustworthiness (crowding in), but the opposite (crowding out) may also occur. By contrast, crowding out never occur when punishment is merely intended as retribution Description: Jel Codes: A13, C73, D02, D03, D82, Z1. 2015-05-07T09:29:32Z On the interpretation of instrumental variables in the presence of specification error Hall, Stephen G. Tavlas, G. S. Swamy, P. A. V. B. http://hdl.handle.net/2381/32061 2015-04-25T02:04:02Z 2015-04-24T15:58:14Z Title: On the interpretation of instrumental variables in the presence of specification error Authors: Hall, Stephen G.; Tavlas, G. S.; Swamy, P. A. V. B. Abstract: The method of instrumental variables (IV) and the generalized method of moments (GMM), and their applications to the estimation of errors-in-variables and simultaneous equations models in econometrics, require data on a sufficient number of instrumental variables that are both exogenous and relevant. We argue that, in general, such instruments (weak or strong) cannot exist. Description: JEL classification: C11; C13 2015-04-24T15:58:14Z The impact of individual versus group rewards on work group performance and cooperation: A computational social science approach Ladley, Daniel Wilkinson, I. Young, L. http://hdl.handle.net/2381/32058 2015-04-25T02:04:09Z 2015-04-24T15:12:42Z Title: The impact of individual versus group rewards on work group performance and cooperation: A computational social science approach Authors: Ladley, Daniel; Wilkinson, I.; Young, L. Abstract: Purpose To examine the effect of individual versus group evaluation and reward systems on work group behavior and performance under different task conditions. Methodology Uses computational social methods using Agent Based Models to simulate work group interactions as different forms of iterated games. Findings Group based systems outperform individual based and mixed systems, producing more cooperative behavior, the best performing groups and individuals in most types of interaction games. A new role emerges, the self-sacrificer, who plays a critical role in enabling other group members and the group, to perform better at their own expense. Research Implications Suggest opportunities for model development and guidelines for designing real world experiments. Practical Implications Helps firms engineer better performing work groups as well as the design of other business systems. Social Implications Identifies mechanisms by which cooperation can be developed in social systems. Originality/Value Demonstrates the role and value of computational social science methods and agent based models to business research. Description: 35 pages, 2 tables, 2 figures under review 2015-04-24T15:12:42Z Making the most of high inflation Charemza, Wojciech Makarova, S. Shah, I. http://hdl.handle.net/2381/32053 2015-04-25T02:04:10Z 2015-04-24T13:39:31Z Title: Making the most of high inflation Authors: Charemza, Wojciech; Makarova, S.; Shah, I. Abstract: The article examines the relationship between the real effects of inflation and its level in countries with frequent episodes of high inflation. The real effects are computed as asymmetric impulse responses of output to inflation separately for the regimes with different signs of the differences between the expected inflation and the predicted output-neutral inflation. It is found that, with the increase in inflation, such effects increase for the regime with the positive sign, relatively to the effects for the regime with the negative sign. It is also shown that this finding is valid for most countries with high inflation episodes, where inflation is greater than 4.8% for at least 25% of quarterly observations. This leads to a simple policy prescription that, in economies with frequent high inflation episodes, anti-inflationary monetary decisions are least damaging for output if undertaken in the periods when the difference between the expected and output-neutral inflation is negative. 2015-04-24T13:39:31Z Microproduction Functions with Unique Coefficients and Errors: Reconsideration and Respecification Swamy, P. A. V. B. Tavlas, G. S. Hall, S. G. http://hdl.handle.net/2381/32052 2015-04-25T02:03:05Z 2015-04-24T10:18:51Z Title: Microproduction Functions with Unique Coefficients and Errors: Reconsideration and Respecification Authors: Swamy, P. A. V. B.; Tavlas, G. S.; Hall, S. G. Abstract: We use certain theoretical measures with absolute precision to uncover a microproduction function with the correct functional form and unique coefficients and error term. This function is not misspecified when its observed dependent variable is rewritten algebraically in terms of the sum of the products of observed regressors with measurement errors and time-varying coefficients and the error term with certain components. These coefficients are the sums of the appropriate partial derivatives and formulas for excluded-variable and measurement-error biases. The partial derivatives can be estimated without these biases. Description: JEL Classification: C22, F33, N10 2015-04-24T10:18:51Z Evidence on Immigrants' Assimilation into Recipient Labour Markets using UK Longitudinal Data between 1981 and 2006 Gagliardi, L. Lemos, Sara http://hdl.handle.net/2381/31910 2015-03-24T03:00:54Z 2015-03-23T09:50:18Z Title: Evidence on Immigrants' Assimilation into Recipient Labour Markets using UK Longitudinal Data between 1981 and 2006 Authors: Gagliardi, L.; Lemos, Sara Abstract: How well do immigrants entering the UK assimilate into recipient labour markets? Using the underexploited, sizeable and long Lifetime Labour Market Database (LLMDB) between 1981 and 2006 we investigate the evolution of the immigrant-native earnings gap – a measure of immigrants' assimilation – across the entire earnings distribution, across cohorts and across nationalities. We are able to control for observable and unobservable individual specific characteristics as well as for specific characteristics of both time periods and recipient labour markets, defined as small geographical areas, and crucially, for the interaction of the two, in a robust empirical model specification anchored in the human capital theory. We also control for cohort specific effects and nationality specific effects. Our results show little evidence of large or persistent earnings disparities across the earnings distribution, across cohorts or across nationalities. These findings are supportive evidence of successful assimilation of immigrants into the UK, suggesting that recipient labour markets primarily reward individuals' characteristics other than, and regardless of, their immigration status. Nevertheless some distinctive features emerge. When investigating the evolution of the immigrant-native earnings gap over time, our results illustrate how immigrants from different continents and cohorts have very different assimilation trajectories. Description: JEL Codes: F22 J31, J71 2015-03-23T09:50:18Z Costs and Benefits of Financial Regulation: Short-Selling Bans and Transaction Taxes Ladley, Dan Schenk-Hoppé, Klaus Reiner Lensberg, Terje http://hdl.handle.net/2381/31698 2015-02-18T02:01:38Z 2015-02-17T15:34:34Z Title: Costs and Benefits of Financial Regulation: Short-Selling Bans and Transaction Taxes Authors: Ladley, Dan; Schenk-Hoppé, Klaus Reiner; Lensberg, Terje Abstract: We quantify the effects of financial regulation in an equilibrium model with delegated portfolio management. Fund managers trade stocks and bonds in an order-driven market, subject to transaction taxes and constraints on short-selling and leverage. Results are obtained on the equilibrium properties of portfolio choice, trading activity, market quality and price dynamics under the different regulations. We find that these measures are neither as beneficial as some politicians believe nor as damaging as many practitioners fear. 2015-02-17T15:34:34Z Two Applications of the Random Coefficient Procedure: Correcting for Misspecifications in a Small Area Level Model and Resolving Simpson's Paradox Swamy, P. A. V. B Mehta, J. S. Tavlas, G. S. Hall, Stephen G. http://hdl.handle.net/2381/31608 2015-02-06T02:01:46Z 2015-02-05T12:11:21Z Title: Two Applications of the Random Coefficient Procedure: Correcting for Misspecifications in a Small Area Level Model and Resolving Simpson's Paradox Authors: Swamy, P. A. V. B; Mehta, J. S.; Tavlas, G. S.; Hall, Stephen G. Abstract: We apply a random-coefficient framework to deal with two problems frequently encountered in applied work. First, we use a real-world relationship to derive from it a sub-relationship among fewer variables without introducing a single specification error to correct misspecifications in a small area level model. Second, we use this framework to resolve Simpson's paradox. We show that this paradox does not arise if a statistical relationship between a pair of variables is derived from the corresponding real-world relationship involving all relevant variables including the original pair without introducing a single specification error. 2015-02-05T12:11:21Z An econometric analysis of financial markets in Eastern Europe : the case of Poland Shields, Kalvinder K. http://hdl.handle.net/2381/30163 2014-12-16T02:18:55Z 2014-12-15T10:36:45Z Title: An econometric analysis of financial markets in Eastern Europe : the case of Poland Authors: Shields, Kalvinder K. Abstract: In recent years, the economies of Eastern Europe have experienced a complete breakdown of their political and economic structures in the transition process. These changes have led to the emergence of a financial sector, the infrastructure of which has had to be established practically from scratch. In Poland, the most important non-bank financial sector, the Warsaw Stock Exchange (WSE), has played an essential role in the privatisation process and in providing an alternative source of finance and investment amongst firms and households. In this thesis, we provide an econometric analysis of asset returns on the WSE.;On the WSE, there exists a one-period censoring of asset returns moving beyond a pre-specified range introduced to limit speculative behaviour and volatility on the market. Our principal aim has been to incorporate such a feature into any analyses undertaken. Considering predictability, in an explicit intertemporal model of an investor's effective demand for a single asset facing a binding quantity constraint, we show that the market may not be predictable and return predictability on such constrained markets is non-trivial. Proposing an approach to model the predictability of returns, we find evidence of predictability of six main returns series on the WSE.;Considering the volatility of asset returns, we investigate whether the finding for developed stock markets that negative shocks entering the market lead to a larger return volatility than positive shocks of a similar magnitude also applies to two emerging Eastern European markets. Concentrating on the WSE and the Budapest Stock Exchange, we therefore also examine whether the findings differ depending on the exchanges' institutional microstructures. We propose an approach to model the conditional volatility of returns on a quantity constrained market such as the WSE and find no evidence of an asymmetric impact of news on the volatility of returns on either exchange. 2014-12-15T10:36:45Z Changes in the incidence and determinants of employer-funded training in Britain, 1984-1994 Shields, Michael A. http://hdl.handle.net/2381/30164 2014-12-16T02:18:56Z 2014-12-15T10:36:45Z Title: Changes in the incidence and determinants of employer-funded training in Britain, 1984-1994 Authors: Shields, Michael A. Abstract: Given the current political and economic importance attributed to private sector training for increasing the skills and productivity of the workforce, this thesis has examined, for the first time, how the determinants of employer-funded training changed for male and female full-time employees in Britain over the decade 1984 to 1994. A related objective, which investigates the importance of personal characteristics, is to determine whether or not an employer-funded training differential exists between white and non-white, male and female, full-time employees in the British labour market. In order to investigate these issues we use data from the Labour Force Survey and Quarterly Labour Survey, and it is important to note that these are the only sources of data in Britain which allow this to be undertaken.;Using logistic models and time-wise decomposition techniques we find that age, highest qualification, firm size and industry are consistently important factors determining training participation. Decomposition results suggest that the growth in employer-funded training between 1984 and 1989 was principally the result of increased demand for training and skilled labour by workers and firms, whilst the growth between 1989 and 1994 was due to the general improvement in the qualification base of workers rather than changes in the age or industry structures. These findings suggest that one key to increased training participation at the workplace is the continued reduction in the numbers of youngsters leaving school with low level or no qualifications. A separate analysis of the manufacturing sector confirmed these results.;We find that non-white employees in Britain are disadvantaged in access to employer-funded training compared to their white counterparts. As such, non-whites are estimated to receive only about one-half of the training received by whites. We have argued that this could lead to future labour market disadvantage in terms of reduced promotion opportunities and wages. 2014-12-15T10:36:45Z Development strategies for small island states : the role of tourism - Volume 1 Yorucu, Vedat. http://hdl.handle.net/2381/30165 2014-12-16T02:18:59Z 2014-12-15T10:36:45Z Title: Development strategies for small island states : the role of tourism - Volume 1 Authors: Yorucu, Vedat. Abstract: The thesis consists of two new paradigms: Porter's (1990) Determinates of National Advantage Theory, and Krugman's (1992) Location and Trade Theory. The main objective in this thesis is to focus on the development strategies for the small island states through the role of tourism. Bulter's (1980) Tourist Area Life Cycle is implemented on the Isle of Man and North Cyprus as a descriptive study.;We modified Witt and Martin's (1987) econometric model and applied on tourism demand analysis for six destination countries (Malta, the Isle of Man, North Cyprus, Turkey, Austria and the UK). The number of tourist arrivals in per capita form are estimated in this thesis. The explanatory variables such as, income, cost of living, exchange rates, air fares and surface travel costs are included in a model for estimation. We also included dummies, trend and habit persistence variables in our estimation analysis. We used cointegration analysis to see the long-run economic relationship on the number of tourist arrivals.;Forecasting tourism demand has also been studied in this thesis and we used RMSE to decide the best forecasting method for 5, 2 and 1 year ahead forecast horizon. HW was found the best forecast method and Econometric forecast did not perform well due to several reasons.;Finally, the aims and hypothesis are explained and related policy implications are developed. 2014-12-15T10:36:45Z An investigation of the employment, unemployment and earnings experience of male immigrants in England Price, Stephen Wheatley. http://hdl.handle.net/2381/30162 2014-12-16T02:18:54Z 2014-12-15T10:36:44Z Title: An investigation of the employment, unemployment and earnings experience of male immigrants in England Authors: Price, Stephen Wheatley. Abstract: This thesis investigates the employment, unemployment and earnings experience of male immigrants in England using data from the Quarterly Labour Force Surveys of the United Kingdom which were undertaken between December 1992 and November 1994. After outlining some theoretical developments in the economics of migration, in particular the importance of self-selection, and surveying the recent empirical evidence, concerning international labour migration to the industrialised countries, the characteristics of the whole male population are examined using descriptive statistics. The sample consists of those resident in England, aged 25-64. These characteristics are then compared with those males who are economically active (according to International Labour Office definitions). Particular attention is given to the variation in the year of immigration and country of birth amongst the foreign born, and the differences between the ethnic white and ethnic non-white populations.;The employment adjustment of foreign-born males to the English labour market is then examined, using Chiswick's (1982) model. Hypotheses concerning the impact of education, potential labour market experience, years since migration and country of birth on the employment rate are investigated using logistic regression analysis. A similar study is also undertaken of the unemployment experience of foreign born males, using both the International Labour Office definition and the official government measure. Predicted percentage probabilities, calculated for individuals with average group characteristics, clarify the separate impact of each variable upon the employment and unemployment prospects of males in England.;Finally, selectivity corrected earnings functions are estimated, controlling for potential bias in both the employment decision and from the non-reporting of wage information. Importantly, the returns to schooling and to potential experience are separated into those received in the country of origin and those obtained after immigration. The country of birth is shown to influence the earnings performance amongst both the ethnic minorities and the immigrants. 2014-12-15T10:36:44Z Theorising government expenditure growth in Malaysia, 1961-1990 : an econometrics analysis of Wagner's Law, Keynesian relation and Peacock-Wiseman hypothesis Lonik, Ku'Azam Tuan. http://hdl.handle.net/2381/30161 2014-12-16T02:18:53Z 2014-12-15T10:36:44Z Title: Theorising government expenditure growth in Malaysia, 1961-1990 : an econometrics analysis of Wagner's Law, Keynesian relation and Peacock-Wiseman hypothesis Authors: Lonik, Ku'Azam Tuan. Abstract: We applied cointegration, Granger-causality and Error Correction Mechanism [ECM] model to test for the Wagner's Law and Keynesian relation in an effort to explain the government expenditure growth in Malaysia for the period 1961-1990. We defined Wagner's Law following Musgrave [1969], Gupta [1967], Goffman [1968] and Mann's [1980] definitions. We modified Musgrave definition by excluding transfer payments from the total government expenditure to test the significance of transfer payments. We tested the Keynesian relation by reversing the Gupta's definition to see the effect of government expenditure on GNP. Following Diamond's [1977] interpretation of Peacock and Wiseman Hypothesis as a theory of structural break, we employed Perron's test for structural break to test for Peacock-Wiseman Hypothesis by considering the May 13, 1969 racial conflict as a form of social upheaval.;Following Nelson and Plosser [1982] and as a pre-requisite to cointegration, Granger-causality and ECM, we tested the data generating process to determine whether the time-series used in this study are generated by trend stationary [TS] or differenced stationary [DS] process. On discovering that the time-series are DS, we proceed by testing the unit root hypothesis using Dickey and Pantula [1985] procedure.;On Wagner's Law, we discovered that a) the variables from Musgrave, modified-Musgrave and Mann's definition are NOT cointegrated, b) using differenced variables, we find no Granger-causality to support Wagner's Law which is a sharp contrast when we tested the relationship using the level of the variables and c) ECM test confirmed our finding in (b). We obtained the same result as (b) when we tested the Keynesian relation. Using Perron's procedure, we cannot trace a structural break in total government expenditure, GNP and ratio of government expenditure in GNP to verify the Peacock-Wiseman Hypothesis. 2014-12-15T10:36:44Z International asset allocation and equity home bias in emerging markets El-Edel, Dalia M. Reda http://hdl.handle.net/2381/30160 2014-12-16T02:18:51Z 2014-12-15T10:36:43Z Title: International asset allocation and equity home bias in emerging markets Authors: El-Edel, Dalia M. Reda Abstract: This thesis investigates equity home bias from an asset allocation perspective in emerging markets. Firstly, a review of equity home bias in modem finance literature is presented, followed by a discussion of the relative strengths and weaknesses of international asset pricing and optimal allocation models. Secondly, the thesis tests static and conditional Capital Asset Pricing Models (CAPMs) for 23 emerging markets over the period February 1997 - December 2007. The study reveals little support for the static CAPM compared to the conditional version; in which the conditional CAPM seems to explain excess returns' dynamics and implies higher volatility persistence in emerging markets compared to developed markets as documented in the literature. Accordingly, the study employs a modified trivariate generalised autoregressive conditional heteroscedasticity (GARCH) model for the period April 1994 - July 2008, in order to estimate time-varying optimal weights in a portfolio of three assets; namely the return on the domestic index, the return on the US index, and the return on the UK index. The number of assets in the portfolio is increased to reach 13 assets in some markets through the estimation of the Dynamic Conditional Correlation (DCC) model denominated in local currencies and in US Dollars. The three models show that the optimal weights on domestic equities divert substantially from the actual equity holdings as documented in survey reports; in addition to the effect of including more assets in the portfolio, and the influence of exchange rate risk on optimal weights. Lastly, the thesis examines the variables that influence equity domestic holdings through the panel estimation of the feasible Generalised Least Squares (GLS) method in order to control for heteroscedasticity. The study suggests that factors related to information asymmetries, economic risks at home, exchange rate volatility, and markets' inefficiencies are the main factors affecting equity domestic bias in emerging markets. 2014-12-15T10:36:43Z Essays in international finance Sarmidi, Tamat http://hdl.handle.net/2381/30159 2014-12-16T02:18:49Z 2014-12-15T10:36:43Z Title: Essays in international finance Authors: Sarmidi, Tamat Abstract: This dissertation comprises three empirical studies on the equity and foreign exchange markets of emerging economies. The motivations for these three studies evolve around the issue of financial liberalization in emerging markets. Specifically, the first empirical study examines the impact of financial liberalization on the volatility of equity returns in the emerging markets. Building on different GARCH models, the chapter shows that volatility could decrease, increase or be unchanged post financial liberalization depending on the level of domestic institutional quality and market characteristics. The analysis shows that volatility is prone to increase (decrease) for a country with low (high) quality of institution and market characteristics. The second study investigates the Uncovered Interest Rate Parity Hypothesis (UIP) for emerging countries. Considering economies that adopt relatively open capital account and free floating exchange rate regimes, both dynamic time series and panel analysis suggest that the coefficient of interest rate differential on the UIP regression is positive and close to unity at longer horizons. The evidence is robust for different base countries (US, Germany or Japan). The third empirical study examines the hypothesis that claims that the exchange rate movements are possible to be predicted in the economies that are fundamentally unstable such as emerging economies. Employing the Vector Error Correction Model (VEC) under the bootstrap techniques proposed by Killian (1999), the findings provide for the evidence of exchange market predictability in emerging economies. 2014-12-15T10:36:43Z Institutions, inequality and the impact of foreign aid : a simultaneous equation approach Torres Ledezma, Sebastián Generoso http://hdl.handle.net/2381/30158 2014-12-16T02:18:48Z 2014-12-15T10:36:43Z Title: Institutions, inequality and the impact of foreign aid : a simultaneous equation approach Authors: Torres Ledezma, Sebastián Generoso Abstract: This study extends existing work on inequality, institutions and the impact of foreign aid by constructing and estimating different cross-country simultaneous equation models that identify bi-directional relationships between income inequality and several indicators of social and economic development. The first set of results for a model combining four endogenous variables (income, education, health and inequality) and estimated using the three-stage least-squares (3SLS) technique, show that lower inequality is associated with improvements in other development indicators, but this is the result of several complex interactions. The most interesting feature of the structural model is the insight it provides into the reasons behind the negative "Africa dummy" in previous growth studies: African countries are not unusually inefficient, given socio-economic conditions, but are unusually unhealthy and unusually inequitable. A new cross-country dataset (the World Bank's Health Nutrition and Poverty Data), is used to assess the impact of foreign aid on the living standards of population sub-groups within 48 developing countries by estimating: (i) the strength of the links between a number of Millennium Development Goals (MDGs) targets and related variables, including access to water and sanitation; and (ii) the extent to which aid impacts on these variables. In doing so, the analysis provides direct evidence on factors driving inequality by employing data for different income groups in each country and by using a unique measure of material wellbeing that does not rely on purchasing power parity (PPP) comparisons. The empirical results show that foreign aid can be expected to improve outcomes across a wide variety of development indicators, including school participation ratios and child health. The study finally focuses on the robust estimation of the long-run impact of political institutions on economic development and on the identification of valid instruments to measure institutional quality. While recent empirical studies have used colonial settler mortality rates as such an instrument, this thesis develops a more eclectic theory of colonial development. 2014-12-15T10:36:43Z Network access regulation and competition policy : the UK contract gas market Easaw, Joshy Zachariah. http://hdl.handle.net/2381/30156 2014-12-16T02:18:47Z 2014-12-15T10:36:42Z Title: Network access regulation and competition policy : the UK contract gas market Authors: Easaw, Joshy Zachariah. Abstract: Increasingly policy-makers and regulatory theorists have focused on network access regulation. This thesis examines the role of network access regulation as part of a regulator's overall competition policy or strategy to introduce competition into privatised industries. It examines in detail recent theoretical models of network access regulation.;The analysis is undertaken in the context of the UK contract gas market. British Gas (BG) was privatised in 1986, and the gas industry structure remained vertically integrated. The incumbent, or in the present case, BG, retains control of the gas network transmission while competing in the final goods, or retail, market. The present research provides a theoretical framework examining the impact of regulatory and competition policies with respect to both the final goods market and network access, on the competitive process in the contract gas market. This is done using a unique dataset on the UK contract gas market made available by a leading gas analyst and broker; John Hall Associates. The theoretical analysis distinguishes between the potential strategic advantage of both BG and the main competing shippers. BG, as the incumbent in the vertically integrated industry, has pre-entry advantages, while the main competing shippers who are wholly or partially owned by North Sea gas producers and operate as downstream firms in the retail market potentially have post-entry advantage.;The entrants pricing behaviour followed a distinct and separate path to that of BG's. An empirical analysis of the entrants' pricing behaviour is conducted. This is done within the context of supergames or repeated games explanation of dynamic oligopoly behaviour. The relationship between access charges and market structure, or the level of market concentration is also empirically established, which shows the impact of access charges on the competitive process, market structure and final goods prices. The estimates are used to give an empirical application of the "Direct-plus-Opportunity Cost Regime" (DORC) model of access pricing. Consequently, the various policy options and choices open to a policy-maker are considered. 2014-12-15T10:36:42Z Essays on the empirical modelling of money demand in periods of financial liberalisation : the case of Indonesia James, Gregory A. http://hdl.handle.net/2381/30157 2014-12-16T02:18:47Z 2014-12-15T10:36:42Z Title: Essays on the empirical modelling of money demand in periods of financial liberalisation : the case of Indonesia Authors: James, Gregory A. Abstract: This thesis contains three essays on the empirical modelling of money demand in periods of financial liberalisation. The empirical analysis uses a quarterly time-series dataset on Indonesian money, output, price, interest and exchange rates from 1983:1 to 2001:4. The first essay uses a univariate method to identify endogenous structural breaks in money and the determinants of money demand. The second essay extends this approach to the multivariate case to detect endogenous regime shifts in money demand. The third essay explicitly controls for financial liberalisation in the MDF.;We find evidence of a break occurring in the second quarter of 1991 and coinciding with a major government intervention in the money market known as the Sumarlin shock. We also find evidence of a break occurring in the last quarter of 1997 and coinciding with the severe economic crisis and a government intervention in the money market for which the Sumarlin shock of 1991 is the precedent. Finally, we show how modelling financial liberalisation as a deterministic drift process results in an improvement over the standard specifications in terms of yielding more constant and plausible values for the parameters of the MDF. 2014-12-15T10:36:42Z Essays on applied international trade Delis, Agelos http://hdl.handle.net/2381/30155 2014-12-16T02:18:46Z 2014-12-15T10:36:42Z Title: Essays on applied international trade Authors: Delis, Agelos Abstract: In this thesis, I examine three empirical research questions that are concerned with the expansion of international trade and the increasing activity of multinational firms. First I attempt to determine empirically the effect of the rising volume of international trade on the relative wages of skilled and unskilled workers in the US economy for the period 1967-1991. Secondly, I try to assess the causal effect on total factor productivity ( TFP) growth of a change in the status of British firms from domestic producers to either exporters or subsidiaries of multinational firms over the period 1990 to 1996. Finally, I decompose the growth rate of the volume of US net exports into five components. These are a term of trade component, an endowment component, a production technology component, a preferences component and an income component. Then I obtain estimates of each component's contribution and I am able to provide possible explanations for the particular path the volume of US net exports followed in the period 1966-1991. 2014-12-15T10:36:42Z Energy demand, energy substitution and economic growth : evidence from developed and developing countries Abd Aziz, Azlina http://hdl.handle.net/2381/30153 2014-12-16T02:18:44Z 2014-12-15T10:36:41Z Title: Energy demand, energy substitution and economic growth : evidence from developed and developing countries Authors: Abd Aziz, Azlina Abstract: This thesis contributes to the literature on energy demand in three ways. Firstly, it examines the major determinants of energy demand using a panel of 23 developed countries and 16 developing countries during 1978 to 2003. Secondly, it examines the demand for energy in the industrial sector and the extent of inter-fuel substitution, as well as substitution between energy and non-energy inputs, using data from 5 advanced countries and 5 energy producer's developing countries. Third, the thesis investigates empirically the relationship between energy consumption and economic growth for these groups of countries over a 26-year period. The empirical results of this study confirm the majority of the findings in energy demand analysis. Income and price have shown to be important determinants for energy consumption in both developed and developing countries. Moreover, both economic structure and technical progress appear to exert significant impacts on energy consumption. Income has a positive impact on energy demand and the effect is larger in developing countries. In both developed and developing countries, price has a negative impact but these effects are larger in developed countries than in developing countries. The share of industry in GDP is positive and has a greater impact on energy demand in developing countries, whereas technological progress is found to be energy using in developed countries and energy saving in developing countries. With respect to the analysis of inter-factor and inter-fuel substitution in industrial energy demand, the results provide evidence for substitution possibilities between factor inputs and fuels. Substitutability is observed between capital and energy, capital and labour and labour and energy. These findings confirm previous evidence that production technologies in these countries allow flexibility in the capital-energy, capital-labour and labour-energy mix. In the energy sub-model, the elasticities of substitution show that large substitution took place from petroleum to coal, natural gas and especially to electricity. In addition, the evidence for significant inter-fuel substitution between coal and natural gas implies that there is a possibility of replacing the use of coal with natural gas in the industrial sector. The existence of moderate input substitution suggests that there is some flexibility in energy policy options and energy utilization. Finally, the empirical evidence presented in this study suggests that the direction of causality between energy consumption and economic growth varies substantially across countries. There is a unidirectional causality running from GDP to energy consumption in 12 developed countries and in 5 developing countries. A unidirectional causality from energy to GDP exists in Netherlands and bidirectional causality exists in Slovak Republic. 2014-12-15T10:36:41Z The macroeconomics of the monetary union of sub-Saharan Africa, the CFA franc zone Coleman, Simeon http://hdl.handle.net/2381/30154 2014-12-16T02:18:45Z 2014-12-15T10:36:41Z Title: The macroeconomics of the monetary union of sub-Saharan Africa, the CFA franc zone Authors: Coleman, Simeon Abstract: This thesis assesses the extent of macroeconomic convergence among the countries that make up the CFA Franc zone. The analysis addresses the following issues: (i) Do the CFA Franc zone countries differ in the ways they respond to macroeconomic shocks?; (ii) To what extent has real exchange rate misalignment in individual member states differed over 1960-99? There is a school of thought that the only devaluation in the history of the Franc zone, in January 1994, was implemented for the sake of the larger economies. This part of the thesis determines whether there is an empirical basis for this claim; (iii) Following a shock to inflation, how do member states of the Franc zone differ in terms of persistence in food and non-food price inflation?;Chapters 1-3 review the background of the Franc zone. Chapters 4-6 are empirical studies, each addressing a separate perspective, as listed above. To address the first issue, we apply the method of Blanchard and Quah (1989) in order to identify and estimate a structural VAR model appropriate for a small open economy. By decomposing the variance of the macroeconomic shocks in this way, the method extends the atheoretic VAR analysis and uses economic theory and time-series analysis to determine the sources of disturbances to economic variables in Chapter 4. Next, defining real exchange rate misalignment as the percentage deviation of the actual from the estimated equilibrium value, Chapter 5 estimates the degree of misalignment in the real exchange rate for twelve individual member states of the Franc zone. Chapter 6 investigates the degree of inflation persistence in the food and non-food sectors of thirteen individual Franc zone countries; for robustness of our estimates, we avoid the knife edge I(0) / I(1) classification and make use of three semi-parametric methods [Geweke and Porter-Hudak (1983), Phillips (1999a,b) and Robinson (1995a)] of estimating the fractional integration parameter in an ARFIMA (p.d.q) model.;Findings from all three perspectives provide substantial evidence of some heterogeneity among the macroeconomies of the Franc zone countries. The research findings suggest that the conduct of uniform policy, such as monetary policy, within the monetary union by the central bank is likely to result in some net losers and net beneficiaries. 2014-12-15T10:36:41Z Essays on banking efficiency, access to finance and firm performance in China Du, Jun http://hdl.handle.net/2381/30151 2014-12-16T02:18:42Z 2014-12-15T10:36:41Z Title: Essays on banking efficiency, access to finance and firm performance in China Authors: Du, Jun Abstract: This thesis aims to contribute to the under-researched area of China's financial system and its role of fostering firm growth. This is achieved by investigating three aspects of the efficiency of the Chinese financial system. The first aspect focuses on the suppliers of financial resources (i.e. banks) and examines the cost efficiency and productivity growth of the Chinese banking industry. The second aspect considers the recipients of finance---manufacturing firms, and investigates how source of finance in firm's capital structure affects its growth performance. The third aspect concentrates on a particular growth channel (exporting) and investigates the interaction between access to domestic finance, foreign direct investment, and the exports of private enterprises. Overall, I find that the Chinese banks lack cost efficiency, the allocation of financial resources through state-owned financial institutions is inefficient, and there is a positive association between access to finance and export market orientation. 2014-12-15T10:36:41Z The dynamics of productivity of the manufacturing sector Aba Ibrahim, Nurhani http://hdl.handle.net/2381/30152 2014-12-16T02:18:43Z 2014-12-15T10:36:41Z Title: The dynamics of productivity of the manufacturing sector Authors: Aba Ibrahim, Nurhani Abstract: This dissertation examines various determinants of productivity. First, it examines the effect of size on the performance of industries in Malaysia. Different proxies for size are used to see if it makes a significant difference to the results. Results show that: annual sales turnover is a better measure for size because it is not biased to capital intensive and labour intensive industries; the change in size of large industries seems to be able to explain more of the variations in output per labour compared to the medium and small ones. Second, it examines whether research and development has a long run relationship with total factor productivity of the manufacturing industries in the UK. R&D are decomposed into R&D capital by the industry's own enterprises, other industries' enterprises, and foreign R&D capital. Panel unit root and panel cointegration tests are performed on a panel of 20 industries during 1980--2002. I find R&D and productivity to be cointegrated in the long run. The elasticities of productivity with respect to these R&D variables show that the industries significantly benefit from other domestic industries and foreign R&D but not their own. Third, it re-examines the direction of the causality between exports and productivity for Malaysian industries by using the error-correction and Granger causality models. By including other variables like size and capital intensity in my models, I have captured the indirect effects besides the direct effects between exports and productivity. I find that these industries support the export-led growth hypotheses, not the growth-driven export hypothesis. However, a further look into the results indicates that there is a possibility of an indirect causality from productivity growth to export through size, as productivity causes size, and size in turn causes exports. 2014-12-15T10:36:41Z On the detection of structural changes in volatility dynamics with applications - Volume 1 Karoglou, Michail http://hdl.handle.net/2381/30150 2014-12-16T02:18:42Z 2014-12-15T10:36:40Z Title: On the detection of structural changes in volatility dynamics with applications - Volume 1 Authors: Karoglou, Michail Abstract: This study aimed to address a series of issues regarding both the CUSUM-type tests that have been developed to detect a potentially existing break in the conditional variance of an economic process, and their corresponding breakdate estimators that are used to identify the time of occurrence of that break. The approach taken has been based on an extensive Monte-Carlo simulation to evaluate the size, power and accuracy of the corresponding breakdate estimator of a set of 27 test variants for approximately 450 data generating processes, some homoskedastic but most conditionally heteroskedastic. The first set of issues is concerned with the finite sample properties of the tests, while the second one focuses on the choice of the appropriate test which depends on the assumptions made regarding the conditional variance of the underlying process. A third set of issues concerns the ability of the tests to detect breaks in the conditional mean of the process as well as the conditional variance. In addition to investigating the theoretical properties of the tests, four applications are included amongst which are a note on the work of Andreou and Ghyssels (2002), who perform a Monte-Carlo analysis with features common to those of this study, albeit with some discrepancies in the results, and three empirical studies that signify the importance of testing for structural changes in processes prior to any further analysis and provide suggestions about robustifying results obtained by the use of the CUSUM-type tests. 2014-12-15T10:36:40Z An economic analysis of bankruptcy law with particular reference to Thailand Thavornyutikarn, Supruet http://hdl.handle.net/2381/30149 2014-12-16T02:18:37Z 2014-12-15T10:36:38Z Title: An economic analysis of bankruptcy law with particular reference to Thailand Authors: Thavornyutikarn, Supruet Abstract: The thesis presents a theoretical and empirical analysis of the Thai Bankruptcy Law, which was substantially amended in 1998. The amendment introduced a legal procedure called 'reorganisation.' The underlying economic rationale of bankruptcy law is extensively examined. Bankruptcy is needed when a solution to insolvency cannot be reached among creditors because of prohibitive transaction costs arising from divergent expectations on and insufficient information about the debtor. Transaction costs are directly proportional to the number of creditors. The real purpose of bankruptcy procedure is to align such divergences, then select the best deployment of the debtor's assets to maximise their value, and redistribute the proceedings from the selected realisation to all creditors. Efficient bankruptcy law would achieve all these tasks and not affect the behaviour of creditors at the time of lending. The design of optimal bankruptcy legislation requires the thorough understanding of economic reality where the law will be enforced. There is no single bankruptcy law that can be optimal for every economy. The law must be tailor-made to achieve the desirable balance between ex ante and ex post efficiency. The structure of the Thai bankruptcy law is analysed along with a review of Thai economic and legal development. Due to the unique characteristics of connections, insolvency is mainly solved by non-bankruptcy approaches. Since the Thai Bankruptcy Act borrows its framework from other legislations, the fundamentals of the Thai economy, especially lending-borrowing relationship, have been overlooked. Subsequently, deficiencies prevail. The Act inherently inclines toward reorganisation, provides wrong incentives for creditors, releases the debtor to its status quo without initiating liquidation, and imposes no threat of managerial displacement. It also grants discretionary power for the court to exercise judgement inappropriately. Hence, there is a room for efficiency improvement. It is argued that creditors can play a greater role in bankruptcy, particularly financial institution creditors because of their higher ability to absorb bankruptcy risk than other types of creditors and close connections between themselves can reduce transaction costs considerably. The thesis proposes an additional procedure, using the exchange of debt or compulsory debt offsetting to be implemented when there is an impasse in the process. Using a binary response model with panel data and the multinomial logit model, the empirical analysis confirms that the conjectured drawbacks in the procedure are apparent. Results also reveal financial institutions are relatively more effective in dealing with insolvency than other creditors. Thus, there is a strong argument to amend the Law to utilise these advantages for the benefit of all other creditors. The evidence reveals that the Thai Bankruptcy Act discourages non-bankruptcy workouts and allows the debtor and/or some creditors to exploit the legal protection for private benefits. It is also confirmed that the number of creditors is directly proportional to the level of transaction costs and make settlement less attainable. 2014-12-15T10:36:38Z Finance, growth and volatility Law, Siong Hook http://hdl.handle.net/2381/30147 2014-12-16T02:18:34Z 2014-12-15T10:36:37Z Title: Finance, growth and volatility Authors: Law, Siong Hook Abstract: This dissertation makes three different contributions to the literature on financial development. Firstly, it examines the role of institutions in the relationship between finance and growth, using data from 72 countries during 1978 - 2001. The relationship between finance, institutions and growth is further analysed at four different stages of economic development. Secondly, it investigates empirically the hypothesis recently purposed by Rajan and Zingales (2003) that openness to trade and financial flows is one of the key determinants of financial development, using data from 43 developing countries during 1980 - 2000. Third, the dissertation examines the impact of financial market liberalisation on stock market volatility in the five East Asian emerging economies during pre- and post-financial liberalisation eras.;The empirical results indicate that both financial development and institutional quality have a positive significant impact on economic growth. Financial development has larger effects on growth when the financial system is embedded within a sound institutional framework. Both variables have the strongest positive impact on economic growth primarily in the upper middle-income economies. In the high-income and lower middle-income economies, financial development has a positive but smaller effect on growth compared to the upper middle-income economies, whereas institutions have a much more powerful impact on growth in the low-income economies.;With respect to the determinants of financial development, the empirical findings suggest that the combination of open product and capital markets promote greater financial development, even after controlling for real GDP per capita, real interest rate and institutional quality. This finding supports the Rajan and Zingales (2003) hypothesis -when the country's borders are open to both capital flows and trades, then it will deliver benefit to financial markets. The findings relate to all the indicators of financial development employed (both banking and capital market) and are robust to alternative measures of capital flows and trade openness, as well as estimation method and sample period.;Finally, the empirical evidence presented in this study suggests that stock market volatility has declined after financial liberalisation in the sample of East Asia emerging markets, but not in the case of Thailand. The endogenous structural break dates of stock market volatility, which are identified correspond closely to dates of official financial liberalisation reforms in these markets. The stock market volatility of these markets, however, becomes much higher during the 1997-98 East Asian financial crisis period. 2014-12-15T10:36:37Z Inflation targeting in emerging economies : an empirical assessment Muñoz Torres, Rebeca Ivett http://hdl.handle.net/2381/30148 2014-12-16T02:18:34Z 2014-12-15T10:36:37Z Title: Inflation targeting in emerging economies : an empirical assessment Authors: Muñoz Torres, Rebeca Ivett Abstract: This doctoral thesis consists of three chapters which are focused on the analysis of monetary policy in emerging economies. In particular, Chapter 2 measures the output cost of disinflation namely, the sacrifice ratio (SR) for emerging economies with and without Inflation Targeting (IT). Three alternative approaches are adopted: first, disinflationary episodes are identified for individual countries. Second, aggregate supply curves are estimated. Third, a structural VAR model is employed. The results suggest that for countries where the process of disinflation has been accompanied by the implementation of IT, lower and more stable levels of inflation can be achieved. Furthermore, sacrifice ratios have increased as the level of inflation decreases. In Chapter 3, the main determinants of monetary policy in Mexico and Israel are analysed. To this end, reaction functions for each country in terms of forward-looking rules are estimated. The results generally suggest that when setting monetary policy, central banks in these countries look beyond just inflation and output. Moreover, movements in the exchange rate seem to play an important role especially in the case of Israel where there is not a clear commitment to price stability. Chapter 4 investigates the impact of exchange rate behaviour on domestic investment in the Mexican Manufacturing Industry within the context of IT. Standard investment equations are utilised to analyse the role of the level and volatility of exchange rates on investment. The results support the view that a depreciation of the exchange rate has a positive effect through the export channel. Volatility also matters and its effect is mainly observed in those sectors that rely more on exports. Differences are observed within different competitive markets. 2014-12-15T10:36:37Z Essays on reference dependence in macroeconomics : theory and evidence Stracca, Livio. http://hdl.handle.net/2381/30146 2014-12-16T02:18:32Z 2014-12-15T10:36:37Z Title: Essays on reference dependence in macroeconomics : theory and evidence Authors: Stracca, Livio. Abstract: There are indications that psychological factors and biases are gaining the centre stage of economics and finance once again, as they did during the thirties with the spreading of Keynesian ideas. Behavioural economics and finance is a booming field, if judged by the number of contributions in recent years and by its success in explaining phenomena which cannot easily find and explanation according to conventional models. Against this background, the main objective of this dissertation is to assess whether the psychological factors modelled in the behavioural finance literature, and in particular by prospect theory (Kahnerman and Tversky, 1979), can have a bearing on macroeconomic outcomes, be it prices set in large and competitive financial markets or real economic developments. In particular, in Chapter 1 I review the behavioural finance literature to see whether the 'anomalies' that this literature has identified could affect market prices. I find many examples in which it could be the case. This is particularly true for anomalies which are widespread among economic agents, for instance because of a social bias. In Chapter 2, I look at how a central bank which is characterised by reference dependence and diminishing sensitivity with respect to deviations of inflation from its target, and which weighs probabilities of uncertain events non-linearly. I find that it can behave in a way which is different from what standard models suggest, in particular by violating the certainly equivalence principle. In Chapter 3, I see how it is optimal, under quite general conditions, for a prospect theory agent to concentrate, rather than diversify risks. Finally, in Chapter 4, I show how loss and disappointment aversion may explain the equity premium puzzle if different assumptions are maintained on the representative agent's investment time horizon and reference point. 2014-12-15T10:36:37Z Economic growth in a small island economy : the case of Cyprus, 1960-1995 Fethi, Sami http://hdl.handle.net/2381/30143 2014-12-16T02:18:28Z 2014-12-15T10:36:36Z Title: Economic growth in a small island economy : the case of Cyprus, 1960-1995 Authors: Fethi, Sami Abstract: The determinants of economic growth have long been of interest, and have been empirically investigated in a number of recent studies. A common question in this area is: why have some countries achieved high rates of economic growth whilst the others remained at lower levels? Evidence from the literature indicates that some countries, particularly East Asian countries or small island states exploiting their own comparative advantage, achieve very rapid rate of growth and catch up with already well-off countries. Others, in particular those from Sub-Saharan Africa, have very little or no growth. This thesis empirically investigates the determinants of economic growth in Cyprus over the period 1960-1995 to evaluate whether the Cypriot economic growth during this period is better explained in an 'old' or 'new' growth modelling framework. Advanced multivariate time series techniques are applied to test the validity of models and to examine the relative importance of different variables which may have an impact on both the long-run and short-run growth of the Cypriot economy. The empirical findings show that physical capital investment, human capital and tourism investment are the major causes of growth in the Cypriot economy. 2014-12-15T10:36:36Z The growth of public expenditure in Turkey, 1950-1990 (macro-models) Demirbas, Safa. http://hdl.handle.net/2381/30145 2014-12-16T02:18:32Z 2014-12-15T10:36:36Z Title: The growth of public expenditure in Turkey, 1950-1990 (macro-models) Authors: Demirbas, Safa. Abstract: This thesis investigates statistically the existence of a long-run relationship between public expenditure and GNP (Wagner's Law) using data for Turkey over the period 1950-1990 and examines whether there is a structural break in the public expenditure series as a result of the 1974 Cyprus War (Peacock and Wiseman's Displacement Effect Hypothesis).;In the public finance literature several models have been used to explain public expenditure growth. For example, macro models such as Wagner's Law, Peacock and Wiseman's displacement effect hypothesis, and microeconomic (or decision process) models of public choice.;This thesis concentrates on macro models. These models try to explain the time pattern of public expenditures relative to broad aggregate variables such as GNP. In terms of macro models, the most prominent empirical generalisations about public expenditure growth are Wagner's Law and the Displacement Effect Hypothesis.;Recent developments in time series analysis, such as cointegration analysis, investigate long-run relationships between variables, which allow us to apply news tests to Wagner's Law. Using the Eagle and Granger cointegration test and Turkish time series aggregate data for the period 1950-1990, we find no empirical support for Wagner's Law. Recent advances in times series analysis allow us to test for the existence of a structural break in the series for public expenditure arising from the 1974 Cyprus War. The results do not support the existence of a displacement effect hypothesis due to the Cyprus War.;Using disaggregated data (public expenditure by economic and functional categories), Engle-Granger cointegration and causality test results provide some evidence in favour of Wagner's Law.;Finally, a synthetic approach encompassing various theories of public expenditure growth (e.g. Wagner's Law, displacement effect hypothesis, demographic variables, relative prices and some dummy variables for country specific conditions) has been used to model public expenditure growth. The results provide some new evidence for Turkey. 2014-12-15T10:36:36Z An econometric analysis of economic reform in Turkey : industrial policy and changing industrial structure Kaplan, Muhittin http://hdl.handle.net/2381/30144 2014-12-16T02:18:30Z 2014-12-15T10:36:36Z Title: An econometric analysis of economic reform in Turkey : industrial policy and changing industrial structure Authors: Kaplan, Muhittin Abstract: This thesis evaluates the impact of the 1980 reform programme on the performance of the Turkish economy through applied econometric analysis. In particular, the effects of trade liberalisation on output, exports, imports and price determination are examined. In the theoretical literature, analyses of economic reform programmes have established that a reduced form relationship exists between trade liberalisation and economic performance and that this relationship is based on complex structural relationships. Our first broad contribution is to formalise and examine these arguments to provide a theoretical framework to help think about the complexity of these issues. The second contribution is to study, using data disaggregated by industry, the impact of economic reform in Turkey since the mid-1960'sThe empirical literature on policy reform on Turkey indicates policy change has a positive effect on economic performance. However, the literature has mainly concentrated on aggregate analysis and paid little attention to the links between policy reform and economic performance operating at the disaggregate, industrial level. An analysis undertaken with aggregate data is subject to two deficiencies: The first, economic deficiency, concerns the loss of important information that can be obtained from an investigation of interrelations between the sectors of economy since aggregate analysis disguises a lot of information. The second, statistical deficiency is closely related to the fact that there are complex interrelations among the sectors of economy, and that the structure of the economy changes over time. Results indicate that trade liberalisation has a positive impact on the performance of the Turkish economy. Importantly, the empirical evidence suggests the existing studies in the literature underestimate the impact of openness on output and the contribution of the international trade sector in this process, but they overestimate the contribution of the competition effect. 2014-12-15T10:36:36Z The design and effects of intergovernmental transfers : the case of Turkish municipalities Tekeli, Recep. http://hdl.handle.net/2381/30142 2014-12-16T02:18:27Z 2014-12-15T10:36:35Z Title: The design and effects of intergovernmental transfers : the case of Turkish municipalities Authors: Tekeli, Recep. Abstract: In this thesis, we test the effect of intergovernmental grants on municipal spending in Turkey. In our analysis, we incorporate Turkey's institutional features in modelling local authority behaviour. We give evidence on the results of incorporating dynamic elements into the expenditure equation in order to explain the variation in municipal expenditure. Our findings also throw light on the existence of the flypaper effect in the dynamic estimation. In our analysis, by using the method of the error correction mechanism (ECM), we also measure how quickly local government expenditure adjusts to its long-run growth path following a disturbance. We find that the past year's expenditure has a significant impact on current local expenditure. Our result in this respect contributes to the existing literature which seems to ignore the significant impact of previous expenditure on current local expenditure while estimating the demand for (or determinant of) local expenditure.;While identifying avenues for further theoretical and empirical research in the flypaper effect, Bailey and Connolly (1998) suggested that one of the most obvious avenues is the inclusion of dynamic elements into the exclusively static approach. This is in order to take account of time lags in adjusting the supply of local government services to the current demand conditions. An important contribution of this thesis is to satisfy Bailey and Connoly (1998)'s request by including the lagged municipal expenditure as an explanatory variable.;We also analyse the grant allocation in Turkey. We test empirically whether central government transfers to the municipalities are made on the basis of economic criteria, or in accordance with the political interest of politicians, and hence the coalition government. We find that equity and efficiency considerations do not appear to motivate the politicians, but neither is grant allocation apparently motivated by the desire to secure re-election. 2014-12-15T10:36:35Z Non-normality and non-linearity in univariate standard models of inflation Hristova-Bojinova, Daniela. http://hdl.handle.net/2381/30141 2014-12-16T02:18:25Z 2014-12-15T10:36:35Z Title: Non-normality and non-linearity in univariate standard models of inflation Authors: Hristova-Bojinova, Daniela. Abstract: The empirical evidences presented in a vast number of recent publications gave rise to debates in the literature regarding the problem of stationarity of inflation. Sometimes considered as a unit root process and sometimes as a stationary process, in most of the studies inflationary time series are modelled assuming normality and linearity. The present thesis relaxes the frequently used assumptions of linearity in price processes and normality in distribution of inflation, and suggests two ways of modelling inflationary data. Firstly, it is assumed that distribution of inflation is a stable Paretian distribution and, under this assumption, stationarity of inflation is examined applying an appropriate test. Secondly, price time series are modelled by treating them as a unit root bilinear process, which further leads to non-normality in distribution of inflation. A recently proposed test for presence of no-bilinearity is then applied. If bilinearity is detected, the bilinear coefficient is estimated by the Kalman filter method. Subsequently, the finite sample properties of this estimator are evaluated using Monte Carlo simulation experiments. A series of Monte Carlo simulations leads to calculating the r-statistic critical values for testing whether the estimated bilinear coefficients significantly differ from zero. The methodologies explained above are then applied to a large set of worldwide price and inflationary data for 107 different countries. Assuming that the distribution of inflation is a stable Paretian distribution 75% of the inflationary time series are classified as integrated of order zero. Under the assumption of normality of distribution of inflation this can be inferred for 11.11% of the inflationary time series. It has been also shown that 71.03% of the price time series exhibit unit root bilinearity. Analysis of the inflationary time series reveals the presence of bilinearity in 9.35% of them. 2014-12-15T10:36:35Z Microfoundations of industrial competitiveness in a small developing economy : the case of Jordan's manufacturing industries Al-Homsi, Jamal Hasan. http://hdl.handle.net/2381/30139 2014-12-16T02:18:23Z 2014-12-15T10:36:34Z Title: Microfoundations of industrial competitiveness in a small developing economy : the case of Jordan's manufacturing industries Authors: Al-Homsi, Jamal Hasan. Abstract: The primary objective of the thesis is to contribute towards the understanding of certain empirical and conceptual issues underlying the global competitiveness of the Jordanian manufacturing industries (JMIs). It aims also to function as an input in informing debate over the future direction of Jordanian industrial competitiveness policy. Having explored the theoretical aspects of industrial competitiveness, the thesis presents a survey on the measurement and interpretation of industrial performance. It then presents three substantive empirical chapters on the microfoundations of competitiveness in JMIs.;The empirical part of the thesis uses a unique, large microdata set, extracted from the 1994 Industrial Census. Each substantive chapter adopts a distinct research design. The first uses an inter-industry design (following Caves and Barton, 1990) to explore technical efficiency (TE). The second utilises an inter-firm design to investigate scale efficiency, another potentially significant cost driver in JMIs. Finally the third substantive chapter offers a case study on the Jordanian pharmaceutical industry (JPI), examining high-technology as a benefit deriver.;Some of the more important empirical findings may be summarised briefly: (i) producer concentration (unadjusted for foreign trade) is found negatively related to TE in a linear and robust link; (ii) the pro-competition effect of imports on TE appears to be insignificant; (iii) increasing returns to scale exists in 44 out of 51 JMIs, and significantly so in 29 industries; (iv) firm size is positively and robustly associated with firm-level export intensity; (v) no systematic pattern between firm size and unit labour costs has been detected; (vi) despite superior average performance in terms of exports, profitability and wage competitiveness, JPI can be considered as a vulnerable industry in face of the current technological and marketing challenges. The thesis then draws out some of the implications of these findings for the formulation of competition, industrial and technology policies in Jordan. 2014-12-15T10:36:34Z Growth dynamics : an empirical investigation of output growth using international data Alava, Mónica Hernández. http://hdl.handle.net/2381/30140 2014-12-16T02:18:24Z 2014-12-15T10:36:34Z Title: Growth dynamics : an empirical investigation of output growth using international data Authors: Alava, Mónica Hernández. Abstract: The rates of growth of output per head vary across countries. Despite the fact that these differences are of a small order of magnitude, they would translate into large differences in the average living standards of the countries if they were to persist over the years. It is therefore very important to understand the process of long run growth and as a consequence many recent studies concentrate on the issue of cross country convergence.;The aim of this thesis is to investigate the process of growth across countries and the possibility of inter-relationships of these processes across countries. To this avail, an empirical analysis of per capita output across countries out first using the exact continuous time version of two neoclassical growth models, the Solow growth model and The Ramsey-Cass-Koopmans model. Results show that when these models are estimated consistently countries do not seem to be converging in the sense typically used in the literature. The rest of the thesis aims to investigate in more detail the processes by which growth in different countries might be related. Based on extensions of another neoclassical model, the Overlapping Generations model, and using a nonlinear switching regime model for estimation, two empirical analyses are carried out. The first one examines the role of balance of payments constraints in cross country growth determination. The second studies the extent of technology spillovers across countries and their effect on the process of growth. On one hand, results reveal little evidence of current account deficits constraining growth in the long run in the G7 countries although there is ample evidence of an influence in the short run dynamics of growth. On the other hand, spillovers of technology across the G7 countries are found to be of importance in the process of growth. 2014-12-15T10:36:34Z An analysis of foreign debt by the Arab countries with special reference to Egypt, Morocco and Tunisia Turkistani, Abdullah Qurban. http://hdl.handle.net/2381/30138 2014-12-16T02:18:21Z 2014-12-15T10:36:33Z Title: An analysis of foreign debt by the Arab countries with special reference to Egypt, Morocco and Tunisia Authors: Turkistani, Abdullah Qurban. Abstract: In this study the demand for foreign debt was disaggregated into government demand and private sector demand. Hence, two demand models have been specified. Where, the government maximises an expected quadratic preference function, and the private sector maximises the expected returns from its financial portfolio. The two models are then empirically tested on data from the three Arab countries. Furthermore, the two models are then combined and empirically tested and compared to the disaggregated model.;The general framework of this study is that the governments of the Arab countries under study pursue internal and external acceptance in an effort to remain in power, which is empirically supported here. Increasing government expenditure, which implies higher budget deficit, reflects the government's efforts to gain internal acceptance. On the other hand, opening up the domestic economy to the world indicates the government's efforts to gain international acceptance.;This study concludes that the Arab countries under study have been undergoing imprudent economic policies that mainly accommodating the government's credit requirements. It has shown that the countries had accepted irresistible foreign loans contracts possibly to finance the current account deficits. Further, the IMF stabilisation program requirement to devalue the national currency, in order to increase foreign exchange inflows and hence reduce foreign debt, founds not to be working for the three Arab countries under study. 2014-12-15T10:36:33Z The determinants of tax evasion : experiments with Turkish subjects Saruc, Naci Tolga. http://hdl.handle.net/2381/30137 2014-12-16T02:18:20Z 2014-12-15T10:36:31Z Title: The determinants of tax evasion : experiments with Turkish subjects Authors: Saruc, Naci Tolga. Abstract: This thesis explores the results of a series of tax experiments that were undertaken with various groups of people in Turkey in 1998. The experiments are described and their resulting data reported, following which conclusions and implications are reviewed.;In total 268 individuals successfully completed the experiments. The objective of the experiments was to gather information with which to test the effect of certain variables upon (i) the decision to evade income taxes and (ii) the amount of income tax to evade both in absolute terms and as a proportion of income.;Our results indicate a very strong positive effect of tax rates upon both the decision to evade income tax and upon the degree (the proportion of income evaded) and absolute amount as well, once individuals have decided to evade. However, the expected fine has a significant deterrent effect on both the decision to evade taxes and the amount of taxes evaded. The effect of income was positive upon the decision to evade and upon the absolute amount of evasion but negative upon the proportion of income evaded. A large fine with a small probability of detection was not found to be more effective in deterring the occurrence of evasion than a small fine with a high probability of detection, but it was more effective in reducing the degree of evasion amongst evaders. We found that student subjects are more compliant than non-student (when the same experimental methodology is applied). However, student evaders did not behaviour substantially differently from employed people of the same age. While an increase in fines had the expected deterrent effect, an increase in audit rate increased the probability of evasion; this latter finding may be explained by the 'spite' or the 'crowding out' effects. The effect of tax ethics was positive and significant on tax compliance. Finally, we found that young people in general evade more often and evade a larger amount of income. 2014-12-15T10:36:31Z An analysis of illicit drug use in the UK MacDonald, Ziggy. http://hdl.handle.net/2381/30136 2014-12-16T02:18:18Z 2014-12-15T10:36:31Z Title: An analysis of illicit drug use in the UK Authors: MacDonald, Ziggy. Abstract: The subject of this thesis is illicit drug use in the UK. Given the wide-ranging implications of illicit drug consumption, it is surprising that the UK government collects very little national data to monitor drug use, and this is despite making a commitment to reducing consumption (and its consequence) in its Ten-Year Drugs Strategy (Home Office, 1998). This is the main concern of this concern of this thesis. In particular, the aim is to explore the nature of the currently available UK data on illicit drug use and the extent to which it can be used to address a number of policy concerns. The analysis presented in this thesis is unique in the UK context, as it would appear to be the first to have considered illicit drug use from an economics perspective using UK data. The conclusions emanating from this analysis have implications for public policy and, perhaps more importantly, for the generation of information required to support policy formation. However, in reviewing the current literature one conclusion of the thesis is that policy makers and drug researchers do not appear to have fully recognised the important role for economic analysis in their work, and there is generally a lack of appreciation of the role of detailed price information in studying the demand for illicit drugs.;Beyond this, issues of inadequate data provision have been explored in this thesis and improvements to current information provision suggested, and in part acted upon by the Home Office. The thesis has shown that the British Crime Survey (BCS) questions only allow us to observe a limited number of drug use states, despite this survey being the main source of national drug misuse information in the UK. In considering the inadequacies of the current data, one conclusion of this thesis is that a modest redesign of the questionnaire would overcome the inherent observational problem arising from the current design at little extra cost to survey administration. 2014-12-15T10:36:31Z


text:
NEW YORK -- When the Los Angeles Angels board their plane in the early-morning hours on Sunday, they may look back at this American League Championship Series against the New York Yankees and wonder how they are down 2-0.
That's because their pitching, once a weakness, has been a strength this postseason, including solid outings from the starters. First John Lackey yielded two earned runs in 5 2/3 innings Friday night, then Joe Saunders -- in just his second career postseason start -- held the Yankees to two runs and six hits in seven innings Saturday night.
In the first two games of the ALCS, Lackey and Saunders have combined for a 2.85 ERA, striking out eight and walking four. Los Angeles' pitching staff overall has produced a 2.21 ERA.
Unfortunately, the Angels' bullpen was not quite as strong Saturday night, and their defense failed them again. Brian Fuentes gave up a solo home run to Alex Rodriguez in the bottom of the 11th inning that tied the game at 3, then Ervin Santana took the loss after Maicer Izturis made a throwing error in the 13th to give the Yankees a 4-3 win and 2-0 series advantage.
"It's tough being down 0-2 no matter what," Fuentes said. "It's a good sign that we're pitching well. We've lost some close games. The starters have gone out and done their jobs, and for one reason or another the little things kill you. The defense and hitting really kind of faltered [in the first two ALCS games]. Against a good team like that, you can't do it."
It was a strange sequence of events in the 13th inning. With runners on first and second and one out, Melky Cabrera hit a grounder to Izturis, who instead of getting the out at first, threw wildly to second and allowed Jerry Hairston to score the winning run.
"I'm not afraid to be aggressive," Izturis said. "It's easy to second-guess after the fact and say I should go to first base, but it's a play that I've made in the past, and [in Game 2] it just didn't happen. You've got to move on."
The errant throw culminated an odd few days for the Angels, normally one of the most fundamentally sound teams in the league. In the first two games of this series, the Angels have committed five errors. Their inconsistent defense coupled with an anemic offense -- which has produced just four runs -- have put them into a 2-0 series hole.
"We did a lot of good things on the ball field [in Game 2]," Angels manager Mike Scioscia said. "Unfortunately, hitting with runners in scoring position wasn't one of them."
The Angels went 3-for-15 with runners in scoring position and left 16 men on base Saturday night. Bobby Abreu stranded five men, while Vladimir Guerrero left six. During the first two games of the series, the Angels are 4-for-18 with runners in scoring position and have stranded 21 baserunners.
"The offense carried us most of the season," Lackey said. "You definitely can't point them out because we didn't pitch that well this season, and they're one of the main reasons we got here."
Angels hitting coach Mickey Hatcher said he was not dismayed by the lack of production, especially with the rain creeping in during the later innings of Game 2.
"We just didn't get the big hit, and they weren't getting the big hit, either, and it took an error to score the run to win the game," Hatcher said of his offense, which was one of the best in the league during the regular season. "When you get into the playoffs, this is what you can expect because you're going to be facing good pitching."
Still, at least the Angels were making contact.
"What I liked [in Game 2] is that we had runners on base, and I think if you can keep putting runners on base, you can break it loose," Hatcher said. "Hopefully, we can do that when we get home."
Pitching coach Mike Butcher echoed what many in the Angels' clubhouse were saying: The Angels didn't rebound from mistakes, while the Yankees did.
"They're a good team; they've capitalized on our mistakes," Butcher said. "We definitely had our chances to win both games, really. Mistakes hurt us [Saturday]. Mistakes hurt them as well, and it just seemed like they capitalized on ours."
Butcher said his staff has pitched well, but he understood the challenge ahead. Jered Weaver will pitch Game 3 on Monday against Andy Pettitte, while Scott Kazmir is slated for Game 4, with CC Sabathia likely going for the Yankees.
"We're going back to Anaheim down 0-2," Butcher said, "and we're going to have to crawl and scratch back, one pitch at a time."
Amy K. Nelson is a staff writer for ESPN.com. You can reach her at email@example.com.

subset: commoncrawl